Investing in Alabama Tax Liens and Tax Deeds

In all 67 Alabama counties, property taxes are due October 1 and become delinquent on January 1 the following year. Once property taxes become delinquent for a property, a tax lien is placed on the property until the taxes are paid in full by the property owner. All Alabama tax lien sales take place in late April or early May. In Jefferson County alone, Alabama's largest county, over 4000 tax lien certificates worth over $2 million are sold. In the State of Alabama, the guaranteed interest earned on a tax lien certificate is 12 percent per annum, starting the day of the tax lien sale.

Generally, the tax lien sales are held on the county courthouse steps and the premium bidding method is used. In a premium bidding method, each property is started at the minimum bid, which is usually the sum of property taxes, the accumulated interest on those taxes, and any sale administrative fees, such as advertising the tax lien on the property in the local newspaper. Starting at the minimum bid, investors take turns bidding up the tax lien certificates until there is only one investor remaining who is willing to pay the highest "premium" on the tax lien certificate. Most Alabama county tax auctions start on a Monday and they will continue on consecutive days until all land parcels have been publicly offered.

The purchaser of a tax lien certificate has the right, but not the obligation, to pay subsequent property taxes on the property each October 1. If the investor allows the subsequent taxes on the property to become delinquent, the tax lien certificate (in the amount of that year's taxes) will be offered again in the April or May sale. If the purchaser holds on to the tax lien certificate, pays all subsequent property taxes for a full three years following the initial tax sale, and the property owner (or other interested party) does not redeem the property (pay all accumulated taxes), the tax lien certificate holder has a right to the tax deed on the property.

All tax lien certificates that did not receive any bids at a county tax sale are assigned to the State of Alabama. These tax lien certificates are often referred to as Over-the-Counter (OTC) or Assignment Purchasing liens. The same "redemption period" is used for these tax lien certificates, which means any tax lien certificates that have been in State inventory for over three years will be offered as tax deeds. Both tax liens and tax deeds in Alabama's state inventory are available for purchase by any private investor. For an OTC tax lien/tax deed list from every Alabama county, go to the Alabama Department of Revenue Property Tax page.

An investor must submit an application to the State for each property for which they have an interest. An investor may submit as many as 20 applications. Instructions and application forms are on the page referenced above. The lists are updated at least once a week. Like any investment, it is important that any investor does their research and due diligence on each property. If a land parcel stays in the State's inventory for more than five years, it is a possibility that an investor can obtain the tax deed to this property for less than the amount of taxes due.

Unlike some other lien states in the United States, tax lien certificates convert into tax deeds after the three-year redemption period without the tax lien certificate holder having to start the foreclosure process on the property. Instead, this tax deed received pursuant to the Alabama process is the result of an administrative foreclosure and does not guarantee a marketable title. So, a quiet title action may be required to gain an insurable title.

To give you an idea of some counties you may want to invest in, I will give you the five most populated Alabama counties below:

• Jefferson County - 656,700
• Mobile County - 404,157
• Madison - 304,307
• Montgomery - 223, 571
• Shelby - 178,182

There is definitely a lot of opportunity when it comes to tax lien and tax deed investing in Alabama.

If you are new to tax lien and tax deed investing, or even if you have experience, you'll want to visit [http://www.uspropertytaxsales.com/]. There is a ton of free invaluable information accessible from this Web site. The Tax Lien Lady is a tax lien investing expert who will be your guide in the world of tax lien investing. You owe it to yourself to download and educate yourself with her amazing and free seven-part video tutorial.

Article Source: http://EzineArticles.com/expert/Russell_Hall/216098

Avoiding Penalties: What to Do If Taxes Can't Be Filed on Time

Everyone knows that federal income taxes are due on April 15th of every year, but what happens if there is a problem completing the return or paying on time? Many assume that the consequences will be harsh, but that is not always the case. The key is to take some simple steps prior to the deadline so that the Internal Revenue Service knows that the process has at least started. Doing nothing at all can result in serious problems, so be sure to contact the IRS if there will be a delay.

Request a Filing Extension

For those who cannot file a return by the April 15th deadline, there is a possibility to obtain an automatic four-month extension. Approximately six million citizens utilize an extension every year. To file for an extension, fill out Form 4868, an Application for Automatic Extension of Time to File a Tax Return. This will need to be turned in by the regular deadline for filing income taxes. This will provide the taxpayer with a new deadline of August 15th.

If more time is needed, a second extension can be requested by filling out Form 2688. It must be filed by August 15th in order to be considered. It will be necessary to provide a probable reason for the extension. If the extension is granted, it allows for a deadline of October 15th to file.

Keep in mind that an extended deadline does not allow for a longer time to pay taxes. If money is owed to the IRS, an estimated payment will need to be sent with an extension request. At least 90 percent of the bill will need to be paid in April. Otherwise, there is the probability of incurring penalties and interest for any amount that is not paid.

What Happens If an Extension Is Not Requested?

For anyone who does not make this request to the IRS by April 15th, they can impose a stiff penalty of up to five percent for each month not to exceed 25 percent. Interest will also be applied to the money that is owed.

What If the Money Owed Cannot Be Paid?

There may be instances in which it is difficult to make the required payment to the government. If the full payment cannot be remitted, send in as much as possible with a filed return. There is a much worse penalty for not filing at all than for not paying after filing. A penalty can be as much as 25 percent for not filing at all.

Paying taxes is an inevitable task for everyone in the country. It is important to file on time and pay what is owed. Make sure to always pay attention to due dates and file extensions if necessary. If a large bill is expected, consider putting some money into a special bank account dedicated to taxes. This will help prevent any surprises from appearing.

When considering filing taxes, Yreka, CA residents visit Hofmann Tax & Bookkeeping Service. Learn more at http://www.hofmanntax.com/.

Article Source: http://EzineArticles.com/expert/Andrew_Stratton/83489

IRA Income - Higher Retirement Income Equals Less In Taxes?

If your IRA income goes up will you pay more in taxes or less? Usually more! I am not a CPA but with some common sense and careful thought we can decrease your taxes due and increase your IRA income!

If you are a CD investor at the bank and take IRA income you might be able to lower your taxes due. How? Let's take a look.

For example, if you are taking income in the amount of $30,000 per year and you have $220,000 invested in CD's that are not in an IRA consider this idea for example and see if it might fit into your exact situation. You might be taking way more IRA income or have way more money in CD's to work with.

Since I am not a CPA and like to work with easy round numbers let's make it easy for all of us. Your taxes due at 25% of $30,000 would equal $7,500. If you were also earning interest on your CD at 3% you would pay $1,650 on the $6,600 earned from your CD each year whether you take the money out or not.

What if we lowered the need for your income withdrawal to $15,000 by annuitizing all or part of your CD?

You annual payments could easily equal $15,000 plus your missed CD money per year and since you would be getting part of your principal back you would still only pay around $1,650 a year in taxes. You would save $3,750 on your IRA income taxes and saved money is made money so really you end up with $33,750 in IRA income each year plus we could always increase your income to replace the lost CD interest if you need it as well. If not then we would just leave that money in the investment. You might even drop into a lower tax bracket and save even more.

In this idea your IRA can then grow much faster to replace your CD value. You get more money, less taxes, higher growth in your IRA, and at least half of your IRA income is guaranteed now at a certain rate. Your monthly stream of new money can also pass on to your heirs in most cases. Sound good?

If you are interested in taking a look at this idea be sure to check with a competent annuity professional. Most agents and brokers have never annuitized an annuity and don't truly have a grasp as to when it is a good idea due to lack of experience. Be sure to ask about how much experience they have in working with annuities. And remember, there is never a bad time to make more money!

Keith Dennis works exclusively with small business owners to help them create tax-free income streams for retirement. Business owners are often stuck in the tax-deferred investment trap. They get a small break now and then end up paying much higher taxes later because they lose their business deductions. Then on top of that, their income is usually 100% taxable!

With tax-free investing you can literally have twice the income in retirement saving the same amount of money, retire sooner, or even save about half as much versus tax-deferred investments.

Get it touch with Keith today to learn how it works through the Small Business Retirement Group's Fan Page.

Article Source: http://EzineArticles.com/expert/Keith_Dennis/175155